Question

1)The EOQ model is most relevant for which one of the following?

	a.	ordering items with dependent demand models
	b.	determination of safety stock
	c.	ordering perishable items
	d.	determining optimal quantities for independent demand models

2)ABC analysis is based upon the principle that

	a.	all items in inventory must be monitored very closely
	b.	there are usually a few critical items (A items), and many items (C items) which are less critical
	c.	the safety stock (in terms of volume) should be higher for a items than for c items
		d) an item is critical if its usage is high 3) The identification of parent items is called: a. Paternity b. Relationship tracking c. Pegging d.Master scheduling 4) ABC analysis divides on-hand inventory into three classes, generally based upon a. item quality b. unit price c. annual dollar volume d. none of the above

Answer 1

1. d. determining optimal quantities for independent demand models

Economic order quantity is the optimal quantity of order needs to be placed for independent demand or in a single order.

2. b. there are usually a few critical items (A items), and many items (C items) which are less critical

The theory is to classify items based on their demand and requirement.

3. c. Pegging

4. c. annual dollar volume

This is the unit required multiplied by the price which gives the annual.dollar volume